Dec 16, 2008

close a few loopholes and balance the budget?

If state lawmakers wanted to raise money by closing tax exemptions, there are 567 to choose from. Taken together, the tax breaks cut $53 billion in potential revenues that the state might have received and $45 million more to local governments.

Of those exemptions, 147 of have been added to the tax rolls since the 2001 legislative session.

Of the grand total, 158 were exemptions to the retail sales and use taxes. These include exemptions on sales of food, medicines and the like, which are worth $30 billion in the 2007-09 budget cycle, according to the Department of Revenue's Tax Exemptions 2008 guide. One hundred and three others are property-tax exemptions worth $9 billion.

Of course, every loophole has a lobbyist, meaning that the legislature, until now, has closed hardly any of 'em.

Most tax-repeal recommendations from 2007 were ignored by the Legislature. Those included elimination of a $2 million break for horse racing and $2 million for club membership dues and fees. Also ignored was a recommendation to re-examine a $47 million break given to nonprofit hospitals and $17 million to nonsectarian organizations.

Lawmakers did manage to get rid of one exemption in 2007. That was a temporary tax break for beef producers enacted after the mad-cow disease scare a few years ago, and lawmakers did not extend its life.

She is scheduled to announce a deep-cutting budget proposal Thursday that could lop $1 billion from K-12 schools, cut jobs or reduce the hours for many of Washington's 110,000 state employees, and shear away big parts of the social safety net.

Gregoire swore off tax increases while on the campaign trail this year, and the recently re-elected Democrat has shown no sign of relenting on that point — even with a budget shortfall she hints could hit $6 billion for the 2009-11 cycle. Even she says it will be "ugly" and that she will hate it.